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Reforms to Boost Agro-based Industry

1. Agro-processing industry utilizes the raw materials generated in the agriculture sector. 

2. It includes food processing and non-food processing. 

How have India’s Agro-based industries evolved?

1. Agro-based industry in India started with cotton in Ahmadabad in 1860s. 

2. Industrialization in 20th century began with cotton in textile sector and sugar. 

3. After independence, Indian economy influenced by Nehruvian and Gandhian thoughts, huge investments were made in capital industry and there were promotional activities for micro enterprises.

4. Sugar, cotton and jute industries became dominant. Cooperative and private sectors started participating. 

5. After 1956, the industrial policy made reservations for small and medium scale industries till 1991.

6. Economic reforms of 1991 liberalized investment, trade regime and de-reserved and permitted large-scale industry to enter small economic activities. 

7. In the late 1990s, Ministry for Micro Small and Medium Enterprise was created.

8. Micro Industry included khadi and cottage industry while, services and industry together constituted as ‘enterprise’. 

9. All India Khadi and Village Industries Board were set up in 1957. 

10. Government started giving subsidies to village industries. 

11. But India did not promote medium scale enterprises after independence.

Which initiatives are promoting agro-based industry?

1. Government is providing collateral-free credit and access to incubation centres.

2. It is also providing better equipment and employment opportunities for entrepreneurs.

3. Foreign Direct Investment (FDI) has been permitted 100% in multi-brand retail. 

4. FDI has been put on an automatic route in seed sector, dairy, animal husbandry, etc. 

5. Pradhan Mantri Mudra Yojana (PMMY), launched in 2015, provides loans up to Rs 10 lakhs to the non-corporate, non-farm small/ micro enterprises. 

6. Stand Up India Scheme facilitates bank loans between 10 lakh and 1 crore to at least one SC or ST borrower and at least one-woman borrower per bank branch.

7. Gramin Bhandaran Yojana aims to meet the requirements of storages.

8. Scheme of Fund for Regeneration of Traditional Industries (SFURTI) aims to organize traditional industries and artisans into clusters.

9. Credit Linked Capital Subsidy Scheme (CLCSS) facilitates technology upgradation of small-scale industries. 

10. Credit Guarantee Scheme for Micro and Small Enterprises facilitates credit to MSME units.

11. PM Employment Generation Scheme (PMEGP), PM Kisan Sampada Yojana (PMKSY), scheme of cold chain, etc, also support agro-based industries.

What are the challenges?

There are challenges to set up Agro-Based Industry in India. It is because

1. Unlike in Bangladesh and Vietnam which allows hire and fire policy, Indian labour laws are highly restrictive and inflexible

2. India’s Ease of Business still needs to improve.

3. India ranks at the bottom in parameters of land, labour and capital.

4. Rate of interest are as high as 12%.

To promote agro-based industries in India, more agri-reforms needs to be aggressively pursued.